North American institutional investors and private market managers expect the U.S. economy to continue growing in 2026, but with markets entering a more fragile and selective phase, according to new independent research commissioned by Ocorian.
“Investors are not pulling back, but they are becoming more disciplined. The expectation of continued growth sits alongside a clear-eyed assessment of risk, valuations and policy uncertainty. This is a market that is adapting, not retreating,” says Vincent Calcagno, head of U.S. growth at Ocorian. “What stands out is that capital remains committed to private markets, deal activity and exits are expected to improve, and investors are actively preparing for volatility rather than being paralysed by it. The outlook for 2026 is neither bullish nor bearish – it is conditional, selective and ultimately constructive.”
Key takeaways:
· The study shows that confidence in underlying economic momentum remains intact, even as respondents actively prepare for valuation resets, inflation persistence and shifting policy conditions.
· Almost all respondents (98%) expect a correction in U.S. equity markets during 2026, reflecting widespread recognition that valuations remain elevated rather than a belief that a downturn is inevitable. Investors report adjusting strategy, exit planning and deployment pacing accordingly, with a stronger emphasis on operational value creation and downside resilience.
· Inflation remains the dominant macro concern. All respondents expressed some level of concern, with 44% describing themselves as very concerned. While nearly half (48%) expect inflation to rise in 2026 and a further 15% believe it will remain flat, expectations of a rapid return to the Federal Reserve’s 2% target are limited. Only 18% anticipate that target being reached in 2026, with most pushing expectations into 2027 or later.
· Despite these pressures, investors remain relatively optimistic about growth. Around half of respondents (49%) align with White House expectations of U.S. GDP growth of between 3-4% in early 2026, placing them well above prevailing consensus forecasts. This combination of growth confidence and heightened caution points to what the study describes as a period of “tempered optimism.”
· Recession risk is viewed as elevated but not inevitable. Nearly six in 10 respondents (57%) believe there is a 40% or greater probability of a U.S. recession in 2026, well above long-term baseline expectations. However, the findings suggest investors are treating recession as a live scenario to be planned for, rather than a base-case outcome, and are continuing to deploy capital selectively where risk-adjusted opportunities exist.
· Monetary policy expectations also reflect this pragmatism. Almost all respondents (97%) expect more than one Federal Reserve rate cut in 2026, with more than half (53%) anticipating three or more cuts. At the same time, 92% believe the appointment of a new Federal Reserve Chair by the Trump Administration will increase political pressure on the central bank, reinforcing expectations that policy will skew toward supporting growth even if inflation remains above target.
· Unemployment is expected to edge higher, with nearly two-thirds of respondents (63%) forecasting a 2026 unemployment rate above current consensus estimates. However, most investors see labour market softening as part of a broader rebalancing rather than a trigger for economic contraction.
